Morgan Brown

About Morgan Brown

Morgan R. Brown has served as Clene Inc.’s Chief Financial Officer since February 2022. He is a CPA (Utah) with an MBA from the University of Utah and a B.S. in Accounting from Utah State University, and previously held senior finance roles at multiple public life sciences companies and a clinical research organization . He was 56 years old and an NEO in 2024 . Clene’s pay-versus-performance disclosure indicates the company does not use TSR or net loss as compensation metrics; however, it reports TSR and net loss for context (see Performance table below) .

Past Roles

External Roles

Fixed Compensation

• Employment agreement (Feb 1, 2022): base salary $375,000; target annual bonus 40% of base; base most recently adjusted in June 2023 to $401,250 .
• 401(k): company match 100% of deferrals up to 3% of comp, capped at $4,500/year .

Performance Compensation

• Annual cash bonus: target 40% of base; determined by Board/Comp Committee based on annual objectives (company does not use TSR or net loss as plan metrics) .
• Equity: options granted under the Amended 2020 Stock Plan; standard 4-year vesting unless noted; 10-year term; exercise price at least FMV on grant date .

Equity Ownership & Alignment

• Beneficial ownership (as of March 25, 2025): 42,448 shares (all via options exercisable within 60 days) — less than 1% of outstanding (8,596,063 shares outstanding) .
• Hedging policy: company “strongly discourages” hedging by directors and executive officers .
• Stock ownership guidelines: not disclosed in proxy.
• Plan overhang: ~23.0% fully-diluted overhang pre-increase; ~28.1% if 2025 share reserve increase approved .

Notes:

• As of 3/25/2025, beneficial ownership count rises to 42,448 options exercisable within 60 days (reflecting additional vesting after 12/31/2024) .
• No pledging disclosures were identified in the proxy; the company discourages hedging transactions .

Employment Terms

• At-will employment under the February 1, 2022 agreement; target bonus 40% of base; eligible for company benefits .
• Severance: if terminated without Cause or resigns for Good Reason, entitled to “Termination Amounts” plus “Additional Termination Amounts” (subject to release). Upon qualifying termination in connection with a Change in Control (within 30 days before or 12 months after), Brown receives two times base salary and target bonus as part of the Additional Termination Amounts .
• Equity acceleration: Brown’s unexercised option shares are subject to accelerated vesting under severance agreements as described in the proxy .
• Good Reason and Change of Control definitions summarized in proxy (e.g., material pay reduction, duties change; and M&A or substantially all-asset sale events) .
• Clawback policy adopted November 28, 2023 pursuant to Nasdaq Rule 10D-1; requires recovery of erroneously awarded incentive-based compensation following an accounting restatement (3 prior fiscal years) .
• 401(k) plan with up to $4,500 match annually .

Compensation Summary (Multi-Year)

Company Performance Context (Pay vs Performance Disclosure)

Notes: Clene states it does not use TSR or net loss as executive compensation performance measures; annual bonuses are determined based on Board-set goals, and equity is viewed as aligning management with shareholders via long-term value creation .

Compensation Structure Observations

• Cash vs equity mix: For 2024, total comp was $760,567 with modest option grant value ($167,363) and an earned cash bonus that remains unpaid due to funding constraints, highlighting liquidity sensitivity in pay outcomes .
• Metric design: Cash bonus tied to annual operational objectives (not itemized publicly); no TSR linkage; milestone-based options tie directly to regulatory and commercialization outcomes (NDA acceptance/approval; $100M revenue) .
• Equity design and dilution: Significant use of options; three-year average burn rate 10.19% and potential overhang rising to ~28.1% post-2025 share reserve increase, implying meaningful dilution risk if awards are exercised/vested .
• Clawback and policies: A Rule 10D-1-compliant clawback policy is in place; hedging is strongly discouraged, supporting alignment and governance standards .

Risk Indicators & Red Flags

• Earned but unpaid bonus amounts for 2024 (funding contingency) could affect retention and morale if prolonged .
• High potential equity overhang (~23.0% to ~28.1%) elevates dilution risk and could increase insider selling pressure as options vest/become in the money over time .
• Beneficial ownership by Brown is <1%, consisting of options, which may provide leverage but limits immediate “skin-in-the-game” in common stock; no pledging disclosed in proxy .

Investment Implications

• Alignment: Brown’s package emphasizes at-risk pay via options, including milestone-based awards tied to FDA and commercial achievements, aligning incentives with value inflection events (regulatory success and revenue scale) .
• Retention and liquidity: Unpaid cash bonuses point to liquidity constraints; however, accelerated vesting on severance and double-trigger CIC economics (2x base and target bonus) provide downside protection, which can mitigate departure risk but also introduce potential cost upon transitions .
• Dilution and supply: Elevated burn rate and overhang, plus service-based and monthly vesting schedules (e.g., 8/16/2024 grant), imply ongoing share supply as awards vest; monitor grant pacing, realized exercises, and financing cadence .
• Governance: Clawback policy and hedging discouragement are positives; absence of disclosed ownership guidelines and limited direct stock ownership may temper alignment optics .